AGL must set Paris-aligned targets for demerged companies
The Australasian Centre for Corporate Responsibility (ACCR) has filed a shareholder resolution with AGL Energy Ltd (ASX:AGL), requesting AGL set short, medium and long-term targets that are aligned with the Paris Agreement for Scope 1, 2 and 3 emissions for both of the proposed demerged companies.
The resolution also requests details on how the proposed demerged companies’ capital expenditure will align with the targets and how their remuneration policies will incentivise achievement of the targets.
Commenting on the resolution, Dan Gocher, Director of Climate and Environment, said:
“AGL has cost shareholders dearly by failing to effectively manage the energy transition to date, seeing its share price plummet by more than 70% since its peak in 2017.
“This erosion of shareholder value was done with eyes wide open as AGL resolutely defended its decision to acquire three coal-fired power stations at a time when the market was starting to move in the opposite direction.
“Recent meetings with members of the Board suggest AGL is not prepared to set Paris-aligned targets, despite that now being a clear expectation of emissions intensive companies.
“AGL claims that it is hamstrung by the Federal Government, which is a disastrous situation for shareholders. Yet three of the directors that have overseen this debacle have been rewarded with Chair and CEO positions at Accel Energy and AGL Australia, which raises a multitude of concerns around their ability to manage the transition ahead.
“To provide investors with the confidence they sorely need, it is imperative that AGL provide a Paris-aligned climate transition plan for both of the proposed entities, with short, medium and long term targets, capital expenditure alignment and a remuneration framework that incentivises rapid decarbonisation.
“AGL’s generation portfolio is simply not decarbonising quickly enough. In the second half of 2020, the carbon intensity of AGL’s operated generation assets was 0.95 tCO2-e/MWh, compared to an average of 0.70 tCO2-e/MWh in the NEM. Since 2015, the average intensity in the NEM has declined by 23%, while the carbon intensity of AGL’s operated assets has declined by just 2%.
“The International Energy Agency’s recently published ‘Net Zero by 2050’ report recommended that all unabated coal plants must be phased out in advanced economies by 2030. Incredibly, Bayswater is scheduled to close in 2035, and Loy Yang A in 2048.”
Text of the resolution and supporting statement can be found here.
ACCR filed a shareholder resolution to AGL Energy in 2020, calling for the early closure of its Bayswater and Loy Yang A coal-fired power stations, which was supported by >20% of shareholders, including the world’s largest asset manager, Blackrock.
AGL Energy - Electricity output by primary energy source
|Landfill gas, biomass and biogas||126||23||0|
|Renewables share (%)||8.5%||9.8%||10.0%||11.9%|
Source: https://www.2020datacentre.agl.com.au/environment, 2021 Half Year Results
AGL Energy - Operational greenhouse gas footprint (material sites and fuels)
|Bayswater Power Station||13,802||14,196||14,041|
|Liddell Power Station||7,881||8,575||10,012|
|AGL Loy Yang||20,093||18,790||16,924|